Thursday, July 21, 2016

court grants motion to dismiss on nominative fair use grounds

Beachbody sued Universal and Wal-Mart for using its “shakeology”
mark on product packaging and purchase receipts. The court granted defendants’
motion to dismiss—apparently the standard is higher when you sue Wal-Mart.

Trademark infringement: the court found nominative fair use on the allegations
of the complaint. First, Beachbody
alleged that its “shakeology” meal replacement shakes had a unique blend of
ingredients that weren’t comparable to the ingredients in defendants’
OmniHealth shakes, and that its shakes were widely recognizable. However, the court
found that Beachbody didn’t plead facts showing that consumers would readily
identify Beachbody’s shakes without the use of “shakeology,” making the use
necessary to identify Beachbody.

Second, Beachbody alleged that defendants’ use of the term
was almost identical to Beachbody’s. But
defendants said they didn’t use the same logo, font, or coloring scheme, and
the court found that Beachbody didn’t plead facts showing that defendants used
more of the mark than reasonably necessary to identify Beachbody.

Third, Beachbody alleged that the phrase “compare to the
ingredients in shakeology” on the OmniHealth packaging would confuse consumers
about Beachbody’s endorsement of the OmniHealth meal replacement shakes. I would have called this “implausible,” but
the court said that Beachbody didn’t provide evidence of actual association,
and noted that the back of the OmniHealth boxes “clearly stated” the lack of
association. Moreover, Beachbody’s shakes
are only sold on its own website, and they are sold for much more than defendants’
product. Therefore, Beachbody didn’t
sufficiently allege likely confusion about affiliation.

The use on the receipts was different (and I would have
advised against this)—allegedly, receipts for purchases of the OmniHealth
shakes say only “shakeology” as the product description. But the court found that Beachbody didn’t
allege any facts to show that consumers would likely associate the products based
on the receipts. Absent sufficient
allegations to defeat the nominative fair use defense, the trademark
infringement claim had to be dismissed.

Related claims such as contributory infringement and
state-law unfair competition also failed, for the same reasons.

False advertising: “compare to the ingredients of
shakeology” allegedly falsely suggested to consumers that the ingredients in OmniHealth
shakes were comparable or similar to those in Plaintiff’s shakes. “Compare to
...” statements can convey a specific message and thus can be falsifiable. However, such a claim of implicit falsity
requires extrinsic evidence of consumer deception, and Beachbody didn’t plead any.
“Simply making the conclusory statement
that Defendants’ ingredients are incomparable to Plaintiff’s proprietary blend
of ingredients does not establish a plausible claim for false advertising.” (So it has to have a survey in hand to sue?)

Nor did the use of “shakeology” on Wal-Mart receipts
constitute false advertising, because the use of the name on the receipt “would
not be a significant factor in a consumer’s purchasing decision,” and therefore
wouldn’t be an advertisement.
[Hunh? This is under-reasoned; it
first sounds like materiality (which is bold on a motion to dismiss). The argument that a receipt isn’t “commercial
advertising or promotion” is reasonable, but given that meal-replacement shakes
are probably supposed to be purchased multiple times, a receipt might serve as
a kind of ad for the next purchase. The
real problem is that this is really a trademark claim; the alleged falsity is
about the source of what the consumer bought, and if anything a receipt that
said “shakeology” would probably make it harder for the consumer to figure out that
she can only get OmniHealth shakes at Wal-Mart.]

Commercial disparagement/trade libel failed too: Beachbody
didn’t plead facts that if believed, could prove any special pecuniary damages
from the Wal-Mart receipts.

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